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Sam Teague, an economist at IHS Markit said: “Pressures on UK household finances intensified at the fastest pace in four months, as rising living costs and subdued pay growth have led to a renewed squeeze on cash available to spend.

“Inflation expectations reached the highest recorded for almost four years, whilst optimism towards future financial wellbeing continued to worsen."

December’s retail sales figures released on Friday revealed that sales growth last year was at its lowest level since 2013.

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The pound euro exchange rate is currently at around €1.135

Pressures on UK household finances intensified at the fastest pace in four months

Sam Teague, economist at IHS Markit

At the same time the euro is showing resilience this morning as the coalition talks in Germany offer signs of progress.

This comes as the Social Democratic party (SPD) gives its endorsement for negotiations with Angela Merkel’s Christian Democratic Union (CDU) to move to the final stage.

However, with all party members set to vote on any final coalition agreement and many within the SPD still reluctant to rejoin Mrs Merkel’s “grand coalition” the formation of a new German government still faces some hurdles.

Looking ahead the GBP/EUR exchange rate may tick higher at the start of the European session tomorrow with the release of the UK’s latest public sector borrowing figures.